Should good Christian investors give up shorts for Lent?

Lent starts on Wednesday (Ash Wednesday), marking the beginning of a 40-day period that ends at Easter. It’s also apparently a fine time to buy stocks.

Remember the old traders’s tale about selling stocks on Rosh Hashanah, the Jewish New Year, and then buying them back ten days later on Yom Kippur, the Jewish Day of Atonement? The whole point of the “Sell Rosh Hashanah, buy Yom Kippur” strategy, if you can call it that, is that the market generally declines over those days, suggesting sitting it out is the best strategy.

For Christians doing penance over the Lenten period, one sacrifice may be to give up their long positions. To test out the “Buy Ash Wednesday, sell Easter” trade idea, Bespoke Investment Group looked at how stocks performed over the 40 days leading up to Easter, which jumps around every year (see above table). Going back to 1989, Bespoke found that, on average, the S&P 500 rises 2.04% over Lent, with the median not being too far off at 2.37%.

While the S&P 500 has posted a gain over Lent 72% of the time going back to 1989, the trend doesn’t deteriorate much when we go back to 1945. Bespoke notes that over the past 68 years, the S&P 500 has gained 69.6% of the time over Lent.

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